Investment Goals for 2017: H1 Report

At the beginning of the year I formulated my five investment goals for 2017. Now that the first two quarters are behind us, it is time to check in on these goals and see how I am progressing.

My five goals for the year were:

  1. Contribute $30,000 to the portfolio
  2. Achieve forward dividend income of $3,500 by the end of 2017
  3. Receive $3,000 dividend income throughout 2017
  4. Keep forward dividend income as a % of my Portfolio at >3.5%
  5. Keep trading cost < $150 

In this half year report I will check in on these 5 goals and see whether I hit the 50% mark (yet).

Goal #1  – contributing $30,000 to my portfolio in 2017 – means that every quarter I need to invest at least $7,500. Simple math dictates that by now I should have invested $15,000 in order to be on track for this goal.

I am happy to report that I actually beat my numbers. In the first half of 2017 I contributed a total of $20,922 to my portfolio. If I can keep this up this would mean an addition of more than $40,000 for the entire year.

How did I deploy this new capital? I started the year by buying 17 additional shares of Starbucks, followed by a new position of 25 shares in Delta Airlines. I closed the month of January off by buying 18 shares of Amgen.

In February I made two buys – both adding to existing positions. I bought 34 shares of Qualcomm.  Later in that month I decided to double my position in Magna – buying an additional 25 shares.

March saw just one buy. I added 15 shares of Accenture to the portfolio for a total of $1,815.

In April I upped my game again with three purchases: I bought 25 shares of Delta Airlines (DAL) for a total of $1,124,  I invested $1,497 in International Paper Co. (IP), and  bought 15 shares of CVS for a total of $1,170.

In May I bought 20 shares of Analog Devices Inc. (ADI) for a total of $1,583 and later in the month added 15 shares of The Travelers Companies (TRV) for a total of $1,850. 

June – the last month of the first half year – I bought 43 shares of AT&T (T) for a total of $1,668. 

Goal #2 is about getting my 12 month projected forward dividend income to $3,500 by the end of the year.

At the last day of 2016 my projected forward dividend income was $2,395.  It now has increased to $3,075 by the end of this first half year.

This means that in H1 my 12 month projected forward income grew by $680 (see red line in the chart below).

To get from $2,395 at the end of 2016 to $3,500 at the end of 2017 I need a total increase of $1,105.

 Since $680*2 = $1,360 I am doing well so far – and am well underway to hit this goal for the entire year.

Goal #3 is about the dividends I will receive between Jan 1st and December 31st of this year. My goal here is $3,000 for 2017. As of June 30 my projection is to receive ~ $2,964 in dividends in calendar year 2017 (the green line below against my target in blue).

Given that I am so close to this goal I am confident I will achieve it within the next month or so. Receiving $3,000 in dividends in 2017 might even have been (way) too conservative!

Through goal #4 I track my forward dividend income (goal #2) as a percentage of my original investments – i.e. my yield on cost (YOC).

In buying stocks I try to maintain a balance between high yielders (such as most REITS) and low yielders with above average dividend growth rates (stock like SBUX, DAL). Overall my goal is to obtain a minimum of 3.5% YOC.

My current YOC is 3.83% – meaning that I am not only on track for this goal but also that my portfolio has some more room for low yielders with above average dividend growth rates.

Finally, goal #5 is about keeping my trading cost low. As I do not my consider myself a trader but an investor, my ideal holding period for a stock is forever. By definition this allows me to keep my trading cost modest – buy once, (almost) never sell and simply start collecting the dividend.

I actually got some unexpected help in achieving this goal – at the beginning of the year my broker Fidelity cut it’s trading fees from $7.95 to $4.95. 

My total trading cost for the first half of this year came to $84.30

This number means I am above my target ($84.30 * 2 comes to $168.60) and I need to lower my trading cost going forward if I want to stay under the $150 target for the year.

Being 4 for 5 at the half year mark is a great position to be in. Keep at it for the remainder of 2017!

What do you think about these goals? How did you do in this first half of 2017? Leave a comment/reply to share your thoughts!

New Buy: Ford (F) and Williams-Sonoma (WSM)

My July watchlist featured two companies: Ford Motor Company (F) and Williams-Sonoma (WSM).

Last week I pulled the trigger on both of them.

On July 13 I bought 150 shares of Ford Motor Company for a total of $1,721.

And on July 14 I bought 30 shares of Williams-Sonoma for a total of $1,371.

In this post I explain the reasons why I made these additions to my portfolio and what this means for my forward dividend income. 

Ford Motor Company, together with its subsidiaries, designs, manufactures, markets, and services automobiles in North America, South America, Europe, the Middle East and Africa, and the Asia Pacific.

The company’s Automotive segment develops, manufactures, distributes, and services cars, trucks, SUVs, and electrified vehicles under the Ford name; and luxury vehicles under the Lincoln name, as well as service parts and accessories.

Its Financial Services segment offers various automotive financing products to and through automotive dealers. Its financing products comprise retail installment sale contracts for new and used vehicles; and direct financing leases for new vehicles to retail and commercial customers, such as leasing companies, government entities, daily rental car companies, and fleet customers.

The company was founded in 1903 and is based in Dearborn, Michigan.

Ford’s current dividend yield is 5.14% – much higher than the average 3.5% yield I strive for in building my portfolio.

The company is not featured on David Fish’s list of Dividends Champions, Contenders and Challengers as it only began paying dividends again after the financial crisis of 2008-2009. However, since 2011 Ford is rewarding shareholders again – both through regular as well as occasional extra dividends.

The payout ratio is quite high at 65%. The 5 year dividend growth is an impressive 24.57% – but has not grown since last year.

Comparing Ford’s Earnings per Share (EPS) in the last quarter versus the same quarter in the prior year shows a -57% decrease. Current year EPS versus last year equals a –13% decrease.

Long term investors like myself need to take a long term view and see how Ford’s strategic bets on electric vehicles, autonomous vehicles and partnerships with Argo AI and Chariot will work out.

For now the 5.14% dividend yield seems well covered and is a great booster to my forward dividend income.

The Price/Earnings (P/E) ratio is 12.56, which is low compared to the broader market but above the 5 year average of 9.79. It is also slightly higher than the industry’s 5 year average of 11.69.

In their July 15 report CFRA marks Ford as a 4 star buy with a 12 month target price of $14 – about 22% above my buying price.

Given Ford’s annual dividend of $0.60 per share this purchase increased my forward annual dividend income by $90.

Williams-Sonoma operates as a multi-channel specialty retailer of various products for home. It operates through two segments, E-commerce and Retail. The company offers cooking, dining, and entertaining products, including cookware, tools, electrics, cutlery, tabletop and bar, outdoor, furniture, and a library of cookbooks under the Williams-Sonoma brand, as well as home furnishings and decorative accessories under the Williams-Sonoma Home brand; and furniture, bedding, bathroom accessories, rugs, curtains, lighting, tabletop, outdoor, and decorative accessories under the Pottery Barn brand.

It also provides products designed for creating spaces where children could play, laugh, learn, and grow under the Pottery Barn Kids brand; line of furniture, bedding, lighting, decorative accents, and others for teen bedrooms, dorm rooms, study spaces, and lounges under the PBteen brand; and mixed clean lines, natural materials, and handcrafted collections under West Elm brand.

In addition, the company offers a range of assortments of lighting, hardware, furniture, and home decor inspired by history under the Rejuvenation brand; and women’s and men’s accessories, small leather goods, jewelry, key item apparel, paper, entertaining and bar, home decor, and seasonal items under the Mark and Graham brand.

It markets its products through e-commerce Websites, direct mail catalogs, and specialty retail stores. As of January 29, 2017, the company operated 629 stores comprising 583 stores in 43 states, Washington, D.C., and Puerto Rico; 26 stores in Canada; 19 stores in Australia; and 1 store in the United Kingdom, as well as 66 franchised stores and/or e-commerce Websites in various countries in the Middle East, the Philippines, and Mexico.

Williams-Sonoma, Inc. was founded in 1956 and is headquartered in San Francisco, California.

WSM’s current dividend yield is 3.44% – close to the average 3.5% yield I strive for in building my portfolio. The company is a Dividend Contender, boasting 12 years of increasing dividends.

The payout ratio is relatively low at 45%. The 5 year dividend growth is a decent 12.13%.

Comparing WSM’s (EPS) in the last quarter versus the same quarter in the prior year shows a 2.27% increase. Current year EPS versus last year equals a 3.85% increase.

These days no retailer can be bought without at least thinking about Amazon. I believe WSM will be able to avoid ‘Death by Amazon’ by continuing to leverage their strong brands through a multi-channel sales approach.

However, an ‘affluent costumer focused’ combination of online and brick-and-mortar  is a coveted space that Amazon is also after, signalling potential risk.

The current Price/Earnings (P/E) ratio is 13.7, which is low compared to the 5 year average of 19.19. 

In their July 15 report CFRA marks Williams-Sonoma as a 3 star hold with a 12 month target price of $55- about 20% above my buying price.

What do you think about Ford and Williams-Sonoma? Are you buying other dividend growth stocks? Leave a comment/reply to share your thoughts!